Here, Shaun Underwood, director of pay-as-you-go energy provider Utilita, reveals his top tips to help micro business owners reduce the cost of energy bills and get the best possible deal from their supplier.
In the domestic market, almost five million people switched their electricity provider in 2016 – up by a quarter on 2015. This is in stark contrast to the business market where one in five UK micro businesses only review their deal every two to five years, with one in ten admitting they have never shopped around, according to a Censuswide survey.
From research at Utilita and what our own customers are telling us, we know that most micro business owners work over 50 hours a week to secure the success of their business. Utilita was started with just four people round a phone, so we appreciate the challenges small businesses face, which is why I’ve compiled some key tips to help small businesses get the best energy contract, with minimal hassle.
Shop around for the best deal regularly
Small business owners are often time poor which means they are less able to negotiate a better energy deal as they juggle competing priorities. The reality of this fact is they could be missing out on savings of up to £180m a year – money which is vital to ensuring the success of their business.
Although it can be difficult, make sure you set aside time to shop around the market at least once a year, as you may be surprised by how much you can save with just a few clicks.
Check the terms and conditions
While in recent months energy firms have been ordered by the Competition and Markets Authority to stop locking businesses into expensive, automatic rollover contracts and make it easier for them to compare the cheapest energy prices, many businesses are still facing challenges.
According to our research, almost three quarters of UK micro business owners have been caught out by the small print. As with any contract, it is important to make sure you know the terms and conditions before you sign as, if you don’t, you leave yourself open to being penalised by crippling rates, inflexible payment terms, high deposits and extended agreements.
Avoid large upfront payments
All too often small businesses are penalised by some providers who demand large up-front deposits which can be up to three times their estimated monthly usage. Cash flow is ultimately the life blood of any business, which is why I think it is unacceptable that small company owners, who cannot afford to have large sums of money tied up in deposits, are punished by large providers who see them as “high risk”.
My advice would be to look for a provider who offers a single tariff, with flexible payment options and no upfront deposits as not all providers tie businesses into handing over large bonds.
Consider a smart meter
Utilita has been at the forefront of the UK’s smart meter rollout since its formation in 2003, so we’re very passionate about their benefits. Smart meters are great for small businesses as they allow you to see your energy usage and spend in real-time, meaning you won’t be faced with any large unexpected bills.
When twinned with the added security of a fixed term, fixed price contract, budgeting your energy usage becomes really simple which is important to help you manage your cash flow and ultimately stay debt free.
Should you face cash flow issues, some providers will switch you on to a pay-as-you-go smart meter solution and roll up the current bill so that energy supply is maintained and businesses can carry on trading. Unfortunately this is not the norm as almost one in ten micro businesses in the UK have been cut off for missing a payment.
Make simple changes to save energy
It may seem insignificant, but often the smallest changes can make a big difference to your energy usage. Ensuring you do simple things like turning off lights when you’re not in and not having the heating blasting out when the windows are open are easy ways of reducing your energy bills.
Drawing up a plan of action to tackle any wastage and involving staff are also important to ensure everyone is doing their part. Things like putting notices on lights to remind people to turn them off when they leave the room or having posters in communal areas are a really effective and inexpensive way of making subtle changes.
Shaun Underwood is director of Utilita, which launched its Business Energy offering earlier this year
For further tips on reducing energy bills, find out how to cope with rising prices as your company grows
Sign up to our newsletter to get the latest from Business Advice.